Couldn't make the meeting but just had a read through the preso deck.

Echo Percy's comments - very disappointing to hear of a poor FH23. I had also expected some good flow-through from new freeze-dryers, but staffing has seemed to be a handbrake.

Having visited the Port Hills plant previously, from a layman's perspective it is some achievement what they've done, especially with Covid/lack of expertise from overseas in installing and commissioning equipment. They now have that capability in-house, but expect has taken longer, cost more than what was originally foreseen. There is little doubt that technically PAZ can produce these products.

Good they have their Chinese listing/approval for pet treats - which will be a key aspect for the new plant. My concern is that they are a little late to the party. My understanding is a bit of the gloss is coming off that Chinese business, and established brands are having to work harder to maintain sales - plus already lots of new entrants. It has attracted alot of investment in NZ already in recent years, and the market is maturing. The boom times or easy wins seem to have gone? Economic conditions and drop in consumer spending meaning less on treats?? Don't know. I would see treats as more discretionary, vs food as a 'need to have'.

The last couple of slides touch on the crux for me (page 31) - tolling compared to own ingredients is a 1 to 7 multiplier. Ingredient to consumer 1 to 4 multiplier. ie the closer you get to the consumer, the more the margin.

I would expect much of the capacity would be for tolling initially (??). Nothing wrong with that as it provides a return - but not what it was invested for.

The key is to move up the value chain and get close to the consumer. Ingredients are a big step for this, but PAZ's own brand is the key. This is a long, difficult journey which takes time, (alot of) money and expertise. But to me the jury is still out whether they can execute on this. Alot of PAZ's stuff is specialised, but freeze-drying is pretty common and not proprietary - expect PAZ have some advantages with capital & running costs of freeze-dryers.

I've mentioned it before, but the big value is in the brand. Why did PE pay $1.5b for Ziwi? Go Healthy to Nestle for $375m? Wasn't for bricks and mortar. The prize is getting closer to the consumer.

AiOra is relaunched, but doesn't seem to have been an initial success. DOT gone nowhere and logged into their website just now and there isn't a website.

Can PAZ do this? Don't know but sincerely hope so. Time will tell. I just hope they have further updates to the USX through the year to keep SH's updated.

Back to the bottom drawer again......